How a payday loan could prove better than a standard bank loan

For a quick and easy way to borrow money, you may want to consider obtaining credit from payday lenders.

A payday loan can prove an effective financial tool to call upon during times of hardship or when you have an unexpected emergency that needs dealing with.

Of course, there are other borrowing options you might be thinking about - a standard personal loan offered by a bank, for example - but the benefits on hand with payday loans could mean they are a particularly attractive prospect.

Indeed, they are ideal if you need to get your hands on a relatively small amount of money. You should find you are able to borrow between about £80 and £1,000 - perfect if you only need a little extra cash to tide you over for a couple of days until you next get paid.

On the other hand, the minimum sum you can take out via a bank loan tends to be at least a few thousand pounds, something which could be beyond your means to pay back.

By borrowing against your next paycheque, you should find the amount of money you obtain via a payday loan to be much more manageable than may be the case if pursuing other avenues of credit.

Another advantage that comes with payday loans is their speed. Whereas it may take several days or weeks for you to apply for a personal loan and for a bank to approve your request, when taking out a payday loan the money could be within your account in just a few hours, so whatever reasons you have for wanting to borrow you can go about achieving your goals with little delay.

Indeed, this kind of borrowing is sometimes referred to as same-day loans and part of the reason why they can be processed so quickly is the fact that there are not masses of forms for you to fill out.

All you need to do is tell the lender how much money you would like to borrow, provide your payroll details and some basic personal information - including your name, address and date of birth - and the loan company will do the rest.

Unlike with other kinds of lending, a credit check will not be carried out when you apply for a payday loan, so there's no need to worry your funds will be delayed while waiting for your credit history to be assessed.

Because they are offered irrespective of financial rating, you should find that you can lay your hands on a payday loan even if you have had problems in the past keeping on top of your cash flow. Indeed, any difficulties that you may have previously experienced repaying mortgage or credit card bills will not affect your ability to access payday lending or what rate of interest you are charged.

The fact that payday loans can be accessed pretty quickly means that they are an ideal product to call upon in times of financial emergency.

Perhaps you have urgent bills to pay that are costlier than the amount of money you currently have in your account, need to get your car fixed urgently or require an advance on your wages in order to pay for the essentials.

Whatever problems you're facing, taking out a payday loan could offer the help you need to make it through the next few days or weeks until you receive your next pay packet without having to go through additional, unnecessary hardship.

For example, you may be in a position where you need to pay your mortgage for the month but have already spent all your wages. Take out a payday loan and you can meet the deadline and not be charged for not making the payment, in addition to avoiding being hit with a failed direct debit fine from your bank account provider.

If you decide to get a personal loan, however, it may be too late by the time the money arrives in your account.

As a general rule, standard loans tend to offer more competitive interest rates than payday loans but if you need to get a relatively small sum of extra money quickly, the latter may prove to be a much more useful option for your financial needs.

For extra money

Moneyextra.com recommends you take independent financial advice before acting on any article

Back

2011-07-28 09:43:04 © Moneyextra.com